Abbott fumble changes the ball game

Tony Abbott
has given a politically floundering government a glimmer of hope, and the resources sector a greater prospect of resource rent tax concessions than all the threats miners could dream up in a year.

A week ago, the government was going into the budget with the Prime Minister’s credibility in tatters and needing to hold on to its lead in the key area of economic management.

The budget blunted the coalition’s debt and deficits attack and gave Labor some clothing of economic respectability. But it was still vulnerable to a savaging in Abbott’s budget reply. But the Opposition Leader failed to capitalise on the budget to gain ground on the economic management issue, making the strategic decision to put all the opposition’s eggs in the resource super profits tax basket.

Making opposing the new tax the one and only issue of the election might have a streetfighter feel in line with Abbott’s reputation, but it meant not making the most of the opportunities.

His attack was weakened by revelations that he had wanted to include a major new spending initiative – a $10,000 payment to stay-at-home mums. But after his appearance on the 7.30 Report on Monday, the issue is not just the Coalition’s standing on economic management, but his credibility.

His dismissal on Monday night of earlier statements he had made concerned an article of Liberal Party faith. What he was dismissing as a bit of political rhetoric said in the heat of the moment was his pledge on radio in February that the Coalition would fund its promises “without new taxes and without increased new taxes".

This was a month before he announced his paid parental leave scheme, funded by a levy on large companies. Coalition MPs watched their leader unravelling on television, unable to believe their eyes.

Suddenly, the election campaign is not a battle between a Prime Minister who has lost voters’ respect and “authentic" Abbott, but a battle of relative credibility.

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The 7.30 Report, and Friday radio interviews, also revealed Abbott wilting quickly under pressure, alarming Coalition MPs, who wonder how he is likely to perform in the heat of an election campaign.

This has intensified the pressure on shadow treasurer
Joe Hockey
to announce some serious spending cuts at the National Press Club today, not just to finance spending but to help give shape to what the Coalition stands for – which is now looking almost as vague as Labor. What has this to do with the resources tax? The government judged last week that it had little room to move under the weight of the miners’ campaign on the tax because any backdown would be seen as another backflip.

In a world of relative credibility however, the game changes.

The government can use industry’s claim that it doesn’t want upfront discounts on investments as a doorway into re-weighting the level at which “super" profits are set.

It is not a certainty that this will happen, but Abbott has given the government room to move. The question is whether Hockey gives them more today.